NVIDIA: Revenue Up, Margins Down.

NVIDIA late last week reported financial results for the second quarter of its fiscal 2004 ended July 27, 2003. The company experienced moderate growth in revenues and profits, but its margins declined dramatically.

For the second quarter of fiscal 2004, revenue increased to $459.8 million, compared to $427.3 million for the second quarter of fiscal 2003, an increase of 8%. Net income for the second quarter of fiscal 2004 was $24.2 million, or $0.14 per diluted share, compared to net income of $5.3 million, or $0.03 per diluted share, for the second quarter of fiscal 2003.

Revenue for the six months ended July 27, 2003 was $864.8 million, compared to revenue of $1.01 billion for the six months ended July 28, 2002. Net income for the six months ended July 27, 2003 was $43.9 million, or $0.26 per diluted share, compared to net income of $88.5 million, or $0.51 per diluted share, for the six months ended July 28, 2002.

As always, here are the most important and interesting facts said by NVIDIA’s executives during the second quarter of fiscal 2004 conference call.

Quarter Highlights, Financials:

Gross margin is lower quarter-over-quarter and now is 28.3%.

Net inventory level is now $217.86 million and represents 60 days of sales. NVIDIA did not comment on its inventory level target, but I reckon that the last quarter’s target was 45-50 days of sales. The executives said that they expect the inventory level to be flat or slightly up in the Q3.